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Tuesday, March 8, 2016

Five or So Questions with Fred Hicks on Evil Hat Crowdfunding

In the indie publishing scene, there are some companies trying out new business models for funding and production. One recent model is being implemented by Evil Hat, the company behind Fate Core and the Dresden Files RPG. When Evil Hat's most recent Kickstarter pulled in over 7 times its original goal, I knew I had to find out more. I spoke to one of the main guys at Evil Hat, Fred Hicks, who gave some insight into the company's plans for using crowdfunding for game releases and supplements.

Tell me about the model for Evil Hat's crowdfunding plans this year. What inspired the development, and what excites you about moving forward?

When we were reviewing how the company did financially in 2015 — good, stable, nothing to be worried about, but not particularly stellar when compared to our best years — we realized that we had fatigued a bit on running crowdfunds and then had let that conceal how much crowdfunding was a component of our budget in our best years.

We're past the fatigue now, and based on past performance, we figure our good average number of big crowdfunds (not counting the ongoing Patreon) is two per year. With one in 2015, we decided 2016 would be where we play catch-up and aim to run at least three. (Honestly we could probably do four, but that fourth is for a card game and those can be a bit "grindy" if you don't have a lot of fire and heat on them, so we need to do our big, definite fire-and-heat card game KS this year and see how that affects our audience & presence in the board & card game category. Also our fantastic backers might shoot us if we try to do four in one calendar year, so best to move that possibility to 2017, for now.)

The Kickstarter we're running right now — ending in about 24 hours from the time I'm saying this, mid-day on February 10th — is Fate More: From Bits to Books. This is "Fate More Part 1", which is to say we'll be running a "Fate More Part 2" KS later. These could have been combined to make a single campaign, but we came to realize that we had two separate groups of things we wanted to do with a sequel-to-Fate-Core campaign, and getting the two halves to play well with each other in one campaign would have been tricky. (More on that in just a bit.)

There's also a concern, I think, with making sure we don't ask too much of our backers at one time, and that we avoid aiming too high on a "sequel" campaign. I've seen time and again that follow-up campaigns often don't pull nearly as much as the original one, and Fate Core's was positively stratospheric.

As it happens, Fate More: From Bits to Books (I'm gonna just start saying FM1 from here on out) has done really well vs. its goals — we're reaching towards $60k right now, and will probably end at least in the mid-$60k range, if yesterday's performance continues. But it's not Fate Core's $433k, and some folks in the middle of the campaign talked about how that wasn't a success for Fate More. I heartily disagree! Our base funding goal for two books, and three additional books beyond that, have already been hit, and I was honestly only aiming at the first four books as reasonably-sure. We got there pretty early on. The remaining three books — hardcover compilations of Worlds from our Patreon project — were more of a question mark, a "do people actually want this sort of book?" query meant to be answered by the backers' choices. And that means any range of possible answers are "correct" and good for our intended goals, whether that answer is "nope, don't do the compilations" or "holy shit PLEASE DO THEM".

So we've already been well past our victory conditions for the campaign for a few weeks now, back in the $35-40k range. :)

At any rate, FM1 is all about taking our digital stuff that's ready to go to print, and getting it into print. This includes a few new releases, as well as pre-existing, already-released-in-digital content. I prioritized and ordered the stretch goals such that the new releases came first, and like I said, folks just blasted right through those. Folks like new. Plus, by focusing in on stuff which was ready or nearly-ready to go to press, we'd have a very short time period between the KS funding and getting those books shipped — we expect to have them in backer hands by June at the latest, with the titles hitting distribution early into Summer. In this sense, FM1 is "Fate Now", the stuff that we're focused on delivering to people in the present, that we want to see in print, on shelves, this year.

Fate More Part 2 (FM2) is the one that looks forward, to the future. It'll have a stronger new-digital-content focus and will ask more questions that our backers will help us answer. FM2's focus will be on kicking off new projects, and expanding the overall Fate Core line in some new directions. We're still firming up exactly what that looks like (with some projects already underway, because it's good to have something ready to give to backers at launch), so please forgive my vagueness here. :) We're aiming to make FM2 happen in the Summer.

But between those two campaigns is our April-or-May one, that may be the big one this year if we can reach the right people: we're going to be crowdfunding the printing and expansion of the Dresden Files Cooperative Card Game. You can read more about it on our website — I've played and demo'd the game dozens of times, and it's tense, fun, and really serves the Dresden Files fans well. We're in the middle of getting art done for the cards, which is the main hold-up at this point, aside from the usual KS preparations — a campaign video, a teach video, polishing and editing the rulebook. This is probably the campaign I'm the most scared about — in a fun-scared sense — simply because I don't know how big it could go, or how fast, or how well we'll connect with the novels' fans, backers, and boardgame fans. I've got a lot of hope, there. We've put out a series of solid card & board games over the past couple years, but we're not really on the map yet. This one has a chance to put us on the map. Maybe even light the map on fire. We'll see!

What are the biggest challenges you've encountered, from a business and marketing perspective, for promoting this project plan and getting the wheels on the ground, so to speak?

Expectations, possibly. Fate Core's KS sets a high bar, and the Fate-focused backer-audience might be expecting us to clear that kind of crazy thing every time. But that KS was a special snowflake; I think Fate More's performance is the calmer, saner, and more typical one between the two, and that's just fine. But Fate Core's KS is also why we have a 10,000-member mailing list we can promote the new Kickstarter to. So in that sense, we're already well past finding our core audience, marketing-wise, for Fate stuff. And we got that audience back in 2013 for Fate Core because we'd spent ten years (!)building the Fate audience and community in the first place. So a lot of the challenges you're talking about are really hurdles that we've cleared in the past.

There's also a communications dimension to this sort of thing that's a little challenging. I'm hugely transparent in how I run the business — Jeff Tidball would say (!)pathologically transparent, and that's a fair cop — but that doesn't mean that people automatically understand the business reasons and dynamics that go into parceling out the things we want to do (to push Fate forward) into two separate KS campaigns.

FM1 is heavily focused on print, but a lot of our audience is very digitally oriented, so I think some folks have felt a bit confused, and it was important to get out in front of that and both talk about how FM2 is going to be more for them,and make sure that to the extent FM1 has a digital component, that it is at least somewhat compelling to them.

I think I managed it, tho it wasn't really until the announcement of our "Extra Goals" in the middle of the campaign (which focus on releasing more of our content into open licensing) that I really hit the right spectrum-breadth for our digital fans. It's nuts: for a heavily print-focused campaign, half of our Fate More backers are only in at the digital tiers. But while they're 50% of the population, they're only about 15% of the revenue at last count; print is still king as far as money-making goes.

Can you talk a little bit about how this crowdfunding project plan meshes with the Patreon funding and development?

Patreon has been about funding the development of the Fate Worlds of Adventure content, but not the manufacture. The Patreon paid for the writing, editing, development, and the biggest cost, art. But that's all it could cover. Putting that content into a physical book costs as much or more than all of those costs combined, at least at our scale. (Print on demand is another matter, but I'm often unsatisfied by print on demand for color interior books.)

So Fate More: From Bits to Books is the manufacture portion, as far as the Patreon content goes (it's also the manufacture portion as far as some digital-only Fate Core KS content goes, with Do and Young Centurions). And there, we've chosen to go for compilation books, four worlds in each hardcover volume, rather than the individually printed softcover worlds we did for Secrets of Cats, Save Game, Aether Sea, and Romance in the Air haven't managed to see sales strong enough to justify the relatively minor cost of printing them. I really love the format — $10 softcovers, 40ish to 60ish pages, full color interiors — but the market hasn't really responded. Could be twofold, and the funded volume(s) from the KS will help us figure out if that's a format-driven lack of interest (do our fans want more stuff in one book? do they want their color interiors to have hard covers?), or a general lack of interest in adventure/light setting content beyond the digital market.

What do you think are some of the key items leading to continued success with both this Kickstarter and your products related to Fate in general?

It's those ten years I mentioned earlier. We started growing the Fate community — almost accidentally, but we were doing it! — just past the turn of the century. During that time up to 2013, there wasn't any Evil Hat originated for-pay Fate book; just Spirit of the Century and, eventually, the Dresden Files RPG, following an earlier-edition digital-only free PDF generic version.

By the time we got ten years deep we had plenty of pent up demand in the community for a core, setting-free Fate book. And that gave us momentum enough to make the Fate Core KS huge and then carry past that into the market at large.

Being able to get out there with Fate-related stuff, like our Fate Dice line, has really helped too, in terms of smoothing out the company's revenue stream. Fate Dice sell very steadily and fill in some of the gaps that book-driven releases can't.

And there's the Patreon, which has let us produce a steady stream of digital releases even in years where we put out very few physical products (hello, 2015).

We've continued our commitment to open content too, which has helped create some Fate focused opportunities for third party publishers out there.

And finally, when we run our KSes, we have our eye on creating products that outlive their Kickstarters.

For one, it's easy to fall into a trap where the Kickstarter is such a good deal, nobody's really motivated to seek out the product without the Kickstarter involved. We don't do early bird specials in the reward tiers, or really any kind of discounting on the products; we sell them at the price they'd sell for in a gamestore. That preserves good retailer relations and makes sure we don't undercut the value of our product.

We also make sure to focus on producing excess inventory we can sell in distribution, but funded by the campaign; that makes sure we're in a fairly low risk footing when it comes to the post-KS discovery of whether or not we reached 25% or 100% of our potential audience through the campaign. There's no way to really assess that aside from shipping your stuff and hoping it sells. Smart budgeting: it's a thing.

With Fate Core, I managed to size our printables such that I printed roughly double of what the Kickstarter population demanded of each product (tho sometimes that multiplier was higher simply b/c there's a minimum number of copies I wanted to print of any one given thing so I can spread it around usefully in distro). So that meant I ended up shipping up to half of what I printed, and had half left over to sell through distro, with the KS's funding of each print goal covering the total print cost of that item.

Worked out pretty well — and concentrated and excited enough of our audience that we've even had to go into reprintings of Core and Accelerated in the time since the KS.

How have you worked internally with your teams to really build a solid concept of how this program will work and get them all on board? After all, if you can't get your people on it, getting customers on it could be even harder.

I presume I am not the smartest guy in the room, and surround myself with people who are smarter than me in their areas of specialty. I make sure to learn from every mistake and listen to my smartfolks' advice, especially when they're telling me that I'm doing something wrong or that we need to shift focus. One of the earliest bits of advice I got from Chris Hanrahan, the first smart person I brought on board, was something he told me to do during the Fate Core KS's insane explosion of activity and funding: get a project manager.

That brought in Sean Nittner, and Sean proceded to make sure we got our shit organized. That let me continue to pursue the things I do best for the business, while someone else was entirely focused on making sure that projects happened, that vision was defined and examined up front on every project, and then communicated to each projectmember at kickoff. And let me tell you, compared to me on that sort of thing, Sean is a super genius and I am... somewhere around a field mouse in terms of intellect. The guy gets how to make a team work on a level I never really did. If I'd been clever enough to get him on board five years earlier, the Dresden Files RPG probably would have come out in 2008 instead of 2010.

At any rate, it means that I don't have to examine (and be responsible for) process; I can focus on implementation. And so can everyone else. Project managers, like editors, are worth their weight in gold. No, gold's too cheap. Platinum? Something radioactive? I dunno. A lot.

Chris and Sean have made more recommendations since — including bringing on Carrie Harris as our head of marketing, another soooper genius — and I've done my best to follow every one of them. It's too bad these folks don't play a sport like they help me run the company, because they'd be at the top of their game and making bank.

(Lest you think I'm leaving him out, Rob Donoghue, my co-founder, remains involved as well, but with life distractions and a day job and so forth his job at Evil Hat is more about safeguarding the soul of the company and making sure we keep in mind what we should do along all the stuff we're figuring out we can do. That, and nothing I've ever done with Evil Hat would've been possible without his support and encouragement. You know. Little things.)

Anyway, vis a vis your question, I think what all that amounts to is that I've focused on working with these guys to make sure we really have our shit together at the top/leadership level of the company. Poor leaders make for unhappy or unengaged or confused freelancers and that's a recipe for poor products and a general lack of enthusiasm.

Plus, I pay people on time, very quickly, and at the time they get their work done rather than making them wait for when the thing they wrote (or whatever) sees publication. Because that's just the right damn thing to do. :) (Note from Brie: This is true! Evil Hat pays on time, quickly, and fair wages. A+!)

Is there anything else you'd like to share about this project that would give people insight into the spirit of the idea?

Insight into the spirit, hmm. Well, going into this, I knew we were taking on a challenge of sorts. The Fate audience is growing, but it's probably really composed of several smaller overlapping groups divided up (tho "divided" really feels like an over-strong word there) into clusters around preferred product formats, preferred product types. I knew we weren't aiming the campaign at all of those clusters equally. I tried to touch on each of them — something for the digital fans, the open content fans, etc — but it was primarily for the folks looking to put some new books on their gaming shelves, the bibliophiles. I'm really proud of how it has performed given that challenge, because it's clear that the fans who weren't as well-served were still quite willing to show up and lend their support. It's my hope that Summer's Fate More 2, the future-directions-focused one, shifts the balance around a bit and satisfies those who weren't as engaged by this one. FM1 gave us a great start to 2016; FM2 will come around in time to give us a big boost through the rest of the year and heading into 2017. If they all work out pretty well, we may have a solid pattern for us to repeat in the years beyond as our catalog continues to grow. Lots of question marks ahead: I'm excited to start answering them, with a little help from the fans. :)

Thanks so much to Fred (and Evil Hat!) for sharing the perspective and plans for Evil Hat's future with crowdfunding! There is a lot here that could be valuable for new developers and publishers, so I hope everyone enjoys it. You can find more on Evil Hat's games on their website, and Fred's regular thoughts on gaming and development on his blog.
This post was supported by the community on patreon.com/briecs.